Previous Year Question
In the context of any country, which one of the following would be considered as part of its social capital?
The proportion of literates in the population
The stock of its buildings, other infrastructure and machines
The size of population in the working age group
The level of mutual trust and harmony in the society
Correct Answer: D
Detailed Solution
Social capital refers to the trust, social relationships, shared norms, cooperation and reciprocity that enable individuals and groups to work together effectively for common objectives.
Where a high degree of trust exists among individuals, communities and institutions:
Transaction costs associated with agreements and enforcement may decline.
Participation in community activities and institutions may increase.
Information and resources may be exchanged more efficiently.
Collective problems and government programmes may be handled more effectively.
Reduced uncertainty and social conflict may create a more favourable environment for economic activity.
Examination of the options:
Option (a): Literacy represents the knowledge and capabilities of individuals and is principally an indicator of human capital.
Option (b): Buildings, infrastructure and machinery have physical existence and form part of physical capital.
Option (c): The working-age population concerns demographic structure and the potential labour force. Its numerical size alone does not constitute social capital.
Option (d): Mutual trust and harmony strengthen cooperation, shared norms and collective action. They are therefore essential components of social capital.